Well-meaning, But Flawed

October 18, 2002

The Palm Beach County Commission should reverse its conceptual approval of a "living wage" ordinance. While supporters can't be faulted for their desire to improve economic conditions for lower-paid workers, the approach is flawed and fraught with possibilities of unintended consequences.

County staffers will present a draft ordinance to commissioners on Nov. 12, nailing down key details such as the actual wage and how widely it might apply.

The initial idea is to require paying full-time employees of county government and of companies with county contracts a "living wage" of at least $9.57 an hour. That's 110 percent of the federal poverty level for a family of four. But commissioners are also weighing wages set at 120 percent or 130 percent of that level, or $10.44 or $11.31 per hour.

Nearly all of the county's 6,000 permanent employees make over $9.57 an hour now. But some of them, and some employees of county contractors, do not. Bringing everyone up to the level is estimated to cost $2 million to $3 million per year.

Government agencies and private businesses should -- and often do -- regularly re-evaluate and upgrade salaries and benefits to attract and retain competent employees and reduce turnover. But private companies shouldn't be compelled by local governments to comply with arbitrary wage levels.

A strong argument can be made that the federal minimum wage, set at $5.15 an hour five years ago, should be increased. That is the responsibility of Congress and should be done only after a thorough debate on the implications to the national economy.

Private businesses must consider bottom-line factors. These include the competitive environment, how wages relate to a company's profitability, employee productivity, and the value an employee adds to a company's products and services.

In addition, wages under the "living wage" are entirely appropriate for certain jobs done by those entering the workforce. No company can justify paying entry-level employees the same wages as workers with a history of successful employment.

Before commissioners voted 4-3 to approve the ordinance in concept, several business group representatives warned that the ordinance could discourage economic growth, punish small businesses that can't afford to pay more and lead to employee layoffs. Also, highly-qualified companies may simply decide not to do business with the county.

If the county feels any of its employees are underpaid, it can raise wages without an ordinance. But that will have a domino effect, placing upward pressure on all wages.

While a government agency has the authority to raise taxes to meet an increased payroll, private companies must deal with the competitive nature of the marketplace or risk going out of business.

No official vote is scheduled Nov. 12, but when the opportunity arises, commissioners should respond with a "no" vote to a well-meaning but impractical measure.